2014 housing forecast – tammie smoot, builders digital experience

Tammie Smoot Digital Marketing Consultant * Building Industry Specialist – 19 Years • MIRM, MCSP, CAPS, CGA, AA, Broker • 2013 NSMC Chair • 2011 NAHB PWB Woman of the Year • 2011 NAHB NSMC Bill Molster Award • 2010 NAHB MCSP of the Year!

• 2009 NC Distinguished Associate of the Year!

BDX : Who we are A team of online marketing experts. Solutions to create the complete digital experience

Distribution partners

5

Advertising Partners

+ VAN

Paid Social Mobile (Tablet) Lifestyle Contextual

May I Ask a Favor?

1.  7 Brilliant Things Tammie Said 2.  Facebook : Builders Digital Experience 3.  Tweet -‐ #the_BDX 4. Who is Bill Barnes? 5.  Thank You to our HBA Staff

Agenda

•  Industry Initiative 2013

•  New Home Shopper Tracking Study

•  BDX Toolkit

•  Insights & Implications

Strategic Industry Initiative

Expanding the New Home Market

The New Home Industry has a problem &

It is 8me to do something about it! 8

What is Start Fresh. Buy New?

–  Large scale, industry wide campaign promoting the advantages of newly-‐built homes to home shoppers.

–  Comprehensive, national research plan to gain insights from both consumers and agents.

–  First-‐of-‐its-‐kind consumer marketing & promotional campaign reaching millions of home shoppers in 2013.

.

Examine Significant Industry Questions

How is the face of today’s home shopper

changing? How is the generational cohort shift affecXng the

shopping process?

What are the primary barriers to “New” home

purchases?

Why is appeal for new growing/waning?

Capture “Pulse of Shoppers”

How financially confident are home shoppers at the moment?

Which options are most popular today?

What type of incentives are most motivating to shoppers?

What type of appliance brands are

most appealing to shoppers?

Website

* Video views: >360k

*Total site visits: >1.1MM

Engagement: Time spent: 03:20 min

www.star<reshbuynew.com

Most Popular Site Content

Start Fresh. Buy New. Digital Ads

Research

© 2013 Builders Digital Experience, Inc. All rights reserved. 17

Insights from Home Shoppers, Recent Buyers & Real Estate Agents Summer 2013 Tracking Study BDX & Hanley Wood

Additions and Changes to Research in 2013

•  2012/13 National R.E. Agent Study •  >4k active agents across 25 MSAs

•  Completed 2nd Annual National Home Shopper Study • Added 6 new markets (31 total MSAs) • Included recent home buyers • Deep dive into “Quality” and value/cost perception • More extensive list of builders for brand awareness section

© 2012 Builders Digital Experience, Inc. All rights reserved. 18

Agent Study Executive Summary

19

Realtors overwhelmingly rely on MLS to learn about new builder properties •  Beyond MLS, realtors learn about new homes through builder announcements and from other

agents/brokers

While realtors have a good understanding of why people are buying, they overestimate why buyers work with realtors

•  Buyers look to realtors for help finding a home and negotiating price rather than mkt knowledge

About half of all realtors prefer to sell existing homes •  Those that are not likely to recommend new homes to prospective buyers cite difficulties with

pricing and convincing buyers of the value

Nearly two-‐thirds of realtors believe that builders are not offering useful training about how to sell new homes

As expected, realtors recognize that new homes outperform existing homes on energy efficiency, customization, etc.

•  Similar to prospective buyers, realtors have varying opinions about whether new homes offer higher quality construction than existing homes

1

2

3

4

5

of homes sold are “Used”

90% But 18% of

Home Shoppers Preferred

New

of shoppers are considering both New and Used

of shoppers who initially prefer New, ultimately buy Used

Longer Buying Cycle

Resulting Marketing Gap & Opportunity…

The Majority of the Realtors and Home Shoppers think that used homes are more affordable

Know your Competition

85% of recent home buyers worked with an agent

agents are crucial

91% of those preferring new yet bought used worked with an agent

Boomers Are an “Easy-er” Sell

Have a home ownership rate of 76%, 21% higher than the US overall home ownership rate

86% of Home Owning Boomers live in Single Family Detached homes

Are 13% more likely to prefer new homes over existing homes (and 14% less likely to prefer existing over new)

Boomers have higher incomes, better credit, more wealth…

February 6, 2014

27

Top triggers: •  Favorable home prices •  Favorable interest rates • Considering retirement •  Tired of current house • Relocated to new city • Desire to live closer to

family/friends

Source: Metrostudy Analysis; BDX 2012 and 2013 Homebuyer Insights Study, Hanley Wood, Chadwick Martin Bailey

Especially Compared to Boomers, Gen Y Is a Harder Sell, But They Are Looking

Have an estimated ownership rate of only 44%

Most impacted by tougher credit and down payment standards

Are 14% less likely to prefer new homes over existing homes (and 5% more likely to prefer existing over new)

Top triggers: •  Favorable home prices •  Favorable interest rates • Planning to increase to family size •  Increase in income • Getting married/moving in with partner •  Increasing rent

February 6, 2014

28 Source: Metrostudy Analysis; BDX 2012 and 2013 Homebuyer Insights Study, Hanley Wood, Chadwick Martin Bailey

Realtors’ Focus on What’s Most Important Does Not Align with Buyers Or What Helps Sell New Homes

29

Base: All (3,044) ● Q19: For each attribute below please indicate the extent to which you believe existing and new homes offered by builders differ? Use your mouse to slide the marker towards your answer. ● Q15: When working with a client to purchase a home, how likely are you to recommend they purchase….

A O S H J

L T

P K Q E D F

M C U V N R B G

I

0

25

50

75

100

Most Important Home Features for Driving Recommendations to Clients

Overall Importance

Average

A Lower cost per square foot/More space for the money

B Lower maintenance costs (money and time spent)

C More living space D Less living space E Proximity to good schools F Convenient to shopping/

entertainment/activities G Safer neighborhood H Character/Uniqueness of home I Convenient to work J Convenient to friends/family K Larger yard or lot/More space

between houses L Established neighborhood M Ability to customize house to best

suit you and your family N Community amenities (pool, park,

golf course, etc.) O Quality of construction P Architecture/Overall design

(appearance of house) Q Better floor plans for me and my

family R Energy efficiency S Sense of community within

neighborhood T Mature trees & landscaping U Prestige/Exclusivity V Storage space

Impo

rtanc

e*

Attribute *Derived Importance: The scores are shown as relative importances using TreeNet Analysis

Prospect Wave 1

27 38

0%

20%

40%

60%

Prospects Wave 1

Prospects Wave 2

% 1st Time Homebuyers

Changing Market Conditions Have Spurred More Traffic and a Higher Percentage of First Time Buyers

30

26

40 34

29

42

29

0%

20%

40%

60%

<Bachelors Bachelors Graduate or Pro. Degree

Educa8on

49

30 22

58

27

15

0%

20%

40%

60%

$50-‐$100k $100-‐$150k $150k+

Income

11

29 23

18 18 20

33 25

11 10

0%

20%

40%

60%

25-‐29 30-‐39 40-‐49 50-‐59 60+

Age

Prospect Wave 2

Source: BDX 2012 and 2013 Homebuyer Insights Study, Hanley Wood, Chadwick Martin Bailey

39 52

61 48

0%

25%

50%

75%

100%

Prospect Wave 1

Prospect Wave 2

Ownership

Own

Rent

17 14

78 83

5 3

Prospect Wave 1

Prospect Wave 2

Type of Construc8on

Custom built on own lot ExisXng Home Brand new home offered by builder

More Renters Are Shopping

31

39 43

61 57

Prospect Wave 1

Prospect Wave 2

Type of Home

Single Family Detatached

Other

Current (Prospect) Primary Residence


Foreclosures ??

Once Again, Life Drives Home Buying

32 Source: BDX 2012 and 2013 Homebuyer Insights Study, Hanley Wood, Chadwick Martin Bailey

53

58

65

67

67

67

71

72

73

75

51

53

61

63

61

63

65

68

66

70

0% 25% 50% 75%

Knowledge about the neighborhood

References for inspectors, contractors, lawyers, etc.

Determine what comparable homes sell for

Knowledge of market conditions

Have more up to date information on available properties

Assistance navigating you through the purchase process

Draft offers and contracts

Find homes with your specifications

Coordinate viewings/appointments

Help negotiate terms/price

% of respondents

Reasons for Using a Realtor Prospect Wave 1 Prospect Wave 2

12 12 4 3

84 85

0%

25%

50%

75%

100%

Prospect Wave 1

Prospect Wave 2

Intend to Use Realtor Don't Know No Yes

Realtors Remain a Critical Partner in the Buying Process

33 Source: BDX 2012 and 2013 Homebuyer Insights Study, Hanley Wood, Chadwick Martin Bailey

Quality of construction

Safer neighborhood

Better floor plans

Energy efficiency

Lower maintenance costs

More living space

Lower cost per sq. foot Architecture/

Overall design Larger yard

or lot Convenient

to work

0.00

2.00

4.00

6.00

8.00

10.00

12.00 Top 10 Most Important Considerations

for Home Purchase

Wave 1 New Segment

Wave 1 Indifferent Segment

Wave 2 New Segment

Wave 2 Indifferent Segment

Average

Top Criteria Remain Largely Unchanged: Quality Reigns Supreme

34

Mea

n im

porta

nce


30

21

33

31

39

38

41

49

58

61

80

31

20

31

23

36

35

34

47

58

63

77

0% 25% 50% 75% 100%

New is Better Existing is Better

29

13

20

13

11

11

8

6

6

7

2

25

11

18

14

12

10

9

6

7

5

2

0% 25% 50% 75% 100%

Prospect Wave 1 Prospect Wave 2

New Homes Have Improved/Maintained Performance in Many Areas But Lost Ground on Quality

Energy efficiency

Ability to customize house

Lower maintenance costs

Beger floor plans for me and my family

Community ameniXes

More living space

Storage space

PresXge/Exclusivity

Architecture/Overall design

Safer neighborhood

Quality of ConstrucXon

35

Existing is Far Better (4pts)

No Difference (Middle 3pts)

New is Far Better (4pts)

Items rated on an 11pt slider scale with anchored ends. Data shown excludes middle 3 points. Items sorted by gap score (new-existing).

Attribute Performance (sorted from high to low based on gap between new minus existing)

Note: Movement of approximately 4 pp is considered meaningful


0

4

5

5

7

9

10

8

11

12

12

16

0

5

5

6

7

9

11

9

11

12

11

14

0 5 10 15 20

Prospects

Recent Buyers

Buyers Use Essentially the Same Factors to Determine Quality of New and Existing Homes

Durability

Workmanship/Craftsmanship

Structural Materials

Fit and finish

Warranty

Architectural Design

Performance specifications

Energy ratings

Built to specifications

Newest technology

Good for the environment/green

Other

36

0

5

6

7

8

9

9

10

10

11

11

13

0

6

6

7

8

9

10

9

10

11

11

13

0 5 10 15 20

Existing Quality New Quality

Importance of Criteria for Determining Quality (among shoppers who will or did consider each type of home)


How do we combat this?

Segment Summaries

38

New Segment

18% of the market

Indifferent Segment

36% of the market

Existing Segment

47% of the market

Who are they? (Compared to other segments)

•  Slightly older •  More likely to be retired •  Less likely to be first-time purchasers •  Slightly higher incomes •  Over index on Elite

•  Slightly more educated •  Over index on Entry Level,

Renters

•  Slightly younger •  Most likely to work full time •  More likely to be first time

purchasers •  Expect to spend less •  More likely to be planning for an

increase in family size •  Over index on Feature & Location,

AA Entry Level, Renters

What have they done?

•  More likely to have visited model homes

•  Spoken with builders

•  Engage in both new and existing behaviors (looking at model homes, looking at home listings online, and driving around looking of homes)

•  More likely to have watched TV shows about local homes/real estate

•  Looked at home listings •  Visited an existing home •  Spoken with a realtor •  Sought pre-approval for a loan •  Bid on a property

Which features are most important to them? Are new construction homes differentiated* these features?

•  Quality of Construction

•  Better Floor Plans

•  Safer Neighborhoods







What are perceived barriers to purchasing a new construction home?

•  Lower cost per sq. foot •  Larger lot •  Less living space

•  Lower cost per sq. foot •  Larger lot •  Character/uniqueness

•  Quality of Construction •  Lower cost per sq. foot •  Overall Design •  Larger lot

*Performance gap (new-existing) score: Much better than existing (20+ higher), On par with or slightly better than existing (0 to 19), Worse than existing (<0)


Builder Toolkit

Builder Toolkit

Available on….

Insights & Implications

The process is lengthy & emotional… the joy gap is real

JOY Gap

-  Joy! -  Relax – focus on your “want-

to-do” list Joy

OFFER ACCEPTED

BEGIN JOURNEY

Excitement “I’m ready for a new

adventure!”

Worried “I hope I make the right

choice.” “Who can I trust?”

Nervous “Can I afford it?”

“Did I buy a lemon?”

Exhilaration “I found the house!”

Tentative Excitement “We did it, but now

what?”

MOVE-IN DATE

Cautious “Will the build process

go okay?” (new) “What will the

inspectors find?” (existing)

Life in an EXISTING home

Life in a NEW home

- Joy (guarded) -  Stressed – list of “to-do’s” is long

9 out of 10 buyers start their new home search online.

Are your new homes on the HBA

Website?

For effective consumer messaging…

…illuminate shortcomings of Used homes

…and emphasize the attributes shoppers value most

Designed for Living

Low Cost of Ownership

Quality Construction

Energy Efficiency

Start with quality content: image quality

-‐15% Average

+15%

Set Yourself Apart????

Builder Insights Initiative

Unleash the value and power of BDX Audience

1,500,000 unique monthly shoppers

Interest Desire Behavior

Brand Awareness, Perception & Opinion How do you stack up with

regards to value?

What can I do to improve my image?

How would you rate each of these builders as far as construc8on quality is concerned?

What is your local brand awareness, aided & unaided?

How likely would a shopper refer you to a friend?

Realtors Primarily Rely on MLS to Learn about New ProperXes

58

1

8

5

5

7

13

13

16

16

18

18

20

25

29

37

38

45

49

80

0% 25% 50% 75% 100%

None of these Other

Radio adver8sing Television adver8sement

Local magazine/publica8on Social media (i.e., Facebook, Twiier, etc.)

Na8onal real estate lis8ng websites Local newspaper ar8cles

Billboards and roadside signage Local newspaper adver8sements

Online adver8sement Online search engines (i.e., Google, Yahoo, etc.)

Local Real Estate/New Home Publica8ons Local real estate lis8ng websites

New home open houses hosted by builders New community/model home visits

Other agents/brokers Builder announcements (e.g., e-‐mails, etc.)

Mul8ple lis8ng service (MLS)

% of respondents

Sources of Informa8on

Base: All, 3,044 ● Q14: How do you become aware of new homes offered by builders that are available to prospecXve (residenXal) buyers that you work with? Select all that apply.

Ask Your Home Owners

THANK YOU FOR ATTENDING

Tammie Smoot MIRM, MCSP, CAPS, CGP

Digital Marke8ng Consultant– Building Industry Specialist

Builders Digital Experience

2011 NAHB Professional Women In Building – Woman of the Year 2013 NAHB NSMC Chair

The Carolinas 704-‐507-‐4411

[email protected]

Builders Digital Experience

2014 housing forecast – tammie smoot, builders digital experience

Documents

new home industry

new homes

new home market

new home purchases

new markets

realtors buyers

new growingwaning

millions of home shoppers